Office: 251 Landau Economics Building (Phone 3-3491; email ckolstad@leland)

Office Hours: Tu 4-6, Th 9-10 or by appt

Class Meets: TuTh 1:15-3:05 in Building 200, Room 02

Refer at least weekly to the class announcements page.

This is an upper division economics class with a prerequisite of Economics 50 (not a co-requisite -- you should already have taken Econ 50). Economics 51 would be nice but is not required. A working knowledge of differential calculus will be assumed. Our goal is for you to become familiarized with the fields of environmental and resource economics, with a particular emphasis on environmental economics. We will try to motivate our discussion with policy relevant readings. However, this course is primarily an economics course and as such will be heavy on theory and economics applications. This is a 5-unit class which means you can expect approximately 10 hours of homework/reading per week, on average.

There are four main areas of economics that we will cover over the course of the quarter: externalities/market failure, environmental regulation, valuation and natural resources. The first of these is the public economics dimension of environmental economics whereas the second is the industrial organization dimension of environmental economics. These are the two primary fields from which environmental economics draws its theory. The third topic area, valuation, is uniquely environmental economics and is concerned with measuring the demand for environmental quality. The fourth area, natural resources, is an extension of capital theory to the case of renewable and nonrenewable resources, such as fisheries, forests, fossil fuels and minerals.

The requirements for the course are one midterm (20%), one short paper (20%), one final exam (30%), approximately seven (weekly minus a few weeks) homework assignments (20%) and class/section participation (10%).

The midterm will be Thursday, May 4. The final exam is Saturday, June 3, 3:30 - 6:30. Exams will cover material discussed in class as well as material in the readings which may not have been discussed in class. The exams are closed book but you may bring one 8.5" x 11" piece of paper to the exam with anything written on it (both sides if you wish).

Homeworks are due in class on Thursdays; homeworks handed in a day late will be penalized and homeworks more than a day late (after 5pm Friday) will be graded but will not count. Homeworks that are not handed in during class should be delivered to your TA. Your worst homework will be dropped in computing the homework part of your grade. See the assignments webpage. After the fact, see the solutions webpage.

The paper is due May 31. The term paper should be an economic analysis of an environmental or resource issue in the news during the course of the academic year. Attach to the paper you submit a copy of the newspaper, magazine or other current affairs article (from the period October 1, 1999 -- May 30, 2000) that is closely related to your paper. Please show your skills with references and footnotes as well as your command of the English language (your grade suffers if the writing is not first rate). Remember to focus on the economic dimensions of the environmental problem in your paper, not just the policy or informational dimensions. For more information, please refer to the paper webpage.

The two texts for the class are:

Charles D. Kolstad, Environmental Economics (Oxford University Press, New York, 2000) [referred to below as Kolstad]

Robert N. Stavins (Ed.), Economics of the Environment, 4th Edition (WW Norton, New York, 2000) [referred to below as Stavins].

Other readings will be on reserve at Meyer Library.

The teaching assistants are:

David Miller

I. Positive Issues (3/28--4/6)

Tuesday 3/28: Review of policy; externalities, public goods and market failure

Thursday 3/30: Externalities and Market Failure

Tuesday 4/4: Decentralized provision of public goods and bads

Thursday 4/6: Dealing with externalities

II. Normative Issues (4/11-4/13)

Tuesday 4/6: Sustainability; social welfare

Thursday 4/13: Social Choice

III. Regulating Pollution--basics (4/17 -- 4/25)

Monday 4/17 (extra class): Los Angeles' experience with air pollution regulation

Tuesday 4/18: no class

Thursday 4/20: Basic regulation theory

Tuesday 4/25: Spatial and temporal dimensions of pollution control

IV. Asymmetric Information (4/27 -- 5/2)

Thursday, 4/27: Moral Hazard

Tuesday, 5/2: Adverse Selection

V. Risk (5/9)

Tuesday, 5/9: Risk and Uncertainty

VI. International (5/11)

Thursday, 5/11: Trade, jurisdictional competition

VII. Macro (5/16)

Tuesday, 5/16: Green accounting & double dividend

VIII. Valuation (5/18 -- 5/23)

Thursday, 5/18: General issues and hedonics

Tuesday, 5/23: Household production and Contingent Valuation

IX. Resources (5/25 -- 5/30)

Thursday, 5/25: Exhaustible Resources and energy

Tuesday, May 30: Renewable resources -- fisheries

Thursday, June 1: Other resource issues

[Reading list version 3/25/00]